Private sector joint purchasing deals

Joint purchasing deals are popular in the public sector and gaining pace among private firms. But few of the latter schemes may be realised, finds Allie Anderson.

Collaboration as a means of securing better deals has been high on the public sector agenda in recent years. NHS bodies, local councils and central government departments have teamed up to approach the market, with big savings for the public purse.

In the current climate, the private sector is also increasingly considering working with competitors to secure better deals on goods and services. Earlier this year German auto giants BMW and Daimler said they aimed to extend their collaborative procurement deal, after identifying more car parts they could source together (Web news, 30 July 2009).
And over half of buyers who responded to the latest SM100 poll confirmed they are looking to introduce such agreements in the next year (News, page 10).

However, purchasing consultants agree there's not yet much evidence of successful joint buying in the private sector. Lee Parkinson, director at Parkinson Procurement Solutions, says that where it has happened, it is "generally based upon close relationships between the respective buyers of peer organisations".

There are several things that hold firms back. For instance, a general aversion to sharing commercially sensitive information can make gathering details of each party's requirements and comparing products, services and prices a difficult process.

A lack of awareness of which categories of spend might benefit from co-sourcing is another barrier, says Peter Smith, managing director at consultancy Procurement Excellence.

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